Huawei, spurned by U.S., expands in Europe

SAN FRANCISCO—Chinese telecom infrastructure manufacturer Huawei Technologies has set its sights on expanding its European base after security concerns in the U.S. slowed the company’s North American progress.

Huawei said Monday (Dec. 10) that it will double its European workforce, employing more than 14,000 workers over the next three to five years, providing jobs in areas recently hard hit by tech layoffs.

In Finland, where Huawei said it intends to open and invest some 70 million euros ($91 million) in an R&D center for new smartphones, snapping up employees laid off by local firm Nokia. The center would be Huawei’s eleventh in the region, with a staff of around 100 people.

By consolidating its foothold in Europe, Huawei is also muscling in on territory formerly belonging to local infrastructure players like Ericsson, from whom the Chinese company just won over a service deal with large U.K. mobile provider, 3, owned by Hutchison Whampoa.

By making smartphone devices as well as providing the infrastructure, Huawei is thought to have a unique value proposition. By delivering devices running Android and soon Microsoft’s Windows 8, Huawei can put even more pressure on European incumbents like Nokia. Indeed, Huawei’s device business unit brought in 22 percent of the firm’s revenue last year.

While the move seems logical, it has also come as a result of pressure from the U.S. government, where congress recently released a report stating that the firm’s infrastructure posed an espionage risk. It’s not the first time Huawei has been accused of spy games, either. Australia banned the firm from participating in a national tender to build the country’s high-speed broadband network over “security concerns.”

Security risks from Huawei? What about national security risks from Microsoft/Intel/Cisco/Google/Facebook to the other countries in the world?
It is simple: don't buy from Huawei, buy from Cisco. Remember Toyota's accelerator pedal.

Maybe the security concerns will be revealed and justified, one day. But if it turns out not to be the case, then these actions that Huawei needed to take (as an enterprise invested in its survival) will just add to the reverse brain drain (out of the US) that has become noticeable lately.

The US and Aussie concern over security has cost many well educated American citizens the opportunity to positively contribute to their local tech environments. Issues like spying are always a potential concern, but what about issues like unemployed engineers turning to desperate situations because of lack of work (or relevant work).